Portfolio Review – March 2019 – Healthcare Stocks Fall

Healthcare stocks falling are offset by contributions in my March 2019 portfolio update

[This March portfolio review about healthcare stocks may contain affiliate links for which I receive a commission at no cost to you. I only recommend products I use and trust.]

Healthcare stocks were an ugly sector to be in this month. The reason? A bevy of democratic candidates talking up medicare for all. It’s easy to see why that would be bad for healthcare.

After all, there’s a ton of parties making money from our current healthcare system. However, that may change if certain candidates have their way. Uncertainty is rarely good for stocks so we saw a big dip in a lot of big healthcare names this month.

That includes one stock I own, UNH, which fell nearly 10% since the last update. Such is the risk of investing in individual securities.

The market as a whole was positive but that one stock drove my portfolio down quite a bit.

As evidenced by the graph from Personal Capital, the Dow was up 1.37% while my own portfolio was down 0.4%. I generally use the S&P 500 as a comparison but for some reason, that data set on PC isn’t working this week. The S&P was up 1.29% in the same period.

healthcare stocks drag down my portfolio returns for the month

The market was up more to start the period but finished with a few down days. The reason for that has been rather disappointing earnings projections and some weak payroll data. The worry is that points to a slowdown and a poor year for stocks which already have somewhat stretched valuations.

In fact, Q1 projections for 2019 are negative and that would be the first quarter of negative growth since 2016. A slowing economy is never a great sign for stocks in the near term.

Whether things go up or down, I’ll keep buying and since my investment horizon is long, I won’t be too upset if prices drop.

In the short term, it’s never great to have a negative month. However, contributions will offset that and I’d always rather buy at lower valuations from a long term perspective.

The negative return month in March is likely offset by contributions. I had a great savings rate month driven by an investment of a large part of my bonus.

My portfolio sat at $562,258.57 last month so let’s see where it is now.

The Portfolio

2019 Portfolio Totals

My portfolio now sits at $567,886.51!

It’s another new record and a 1%(or $5627.94) bump over last month. It’s always nice to see a positive month even when returns were negative.

This month was a unique one since my contributions were a lot higher than normal due to a bonus.

That’s the 2nd month of growth in a row following 4 months of losses.

My taxable accounts were down 5.8% this month. That was entirely due to the UNH losses as that’s my #1 holding. I did trim 25% of my holding during this period(at a price about $10 above today) and reallocated it to an ETF.

In simple terms, I was no longer comfortable holding such a large portion(~20%) of my portfolio in one stock. When I did my initial analysis on the stick, I didn’t account for the risk of medicare for all. The stock has been a firecracker in the past few years and grew beyond a reasonable level for one stock as a % of overall portfolio. I wanted to lock in some of the profit and push it into a more diversified ETF.

I still like the company but feel like medicare for all is a real possibility. As someone who has eyes on retiring early, I like the idea of not having healthcare be tied to my job. However, the reality is that may impact healthcare stocks in a big way.

On top of that, even if it’s not super detrimental to healthcare stocks, I could see the uncertainty making healthcare stocks dead money for a year or two. People may not want to invest in stocks that have a big cloud hanging over them until it clears up.

I don’t plan to sell any more this year but am happy to lower my exposure to the stock at a good price. I’m not excited at the tax impact it will have though! That’s why I always prefer a long term buy and hold strategy.

Tax-advantaged accounts were up 3.39% as they saw an influx of contributions.

Cash was up 8.6% due to contributions and makes up 7.7% of my overall portfolio. That’s below my 10% max but still higher than I’d like it.

Lately, a lot of my free cash has been flowing into my M1 Finance account(see my review here). I like the ability to create my own ETF type holdings there at no cost. It’s a good way to diversify and still own individual securities I like.

This was another decent month on the portfolio front. Contributions continued to flow in and I saw growth despite negative returns. The additional money should make the March dividend update an exiting one!

The drop in the price of UNH will likely impact my asset allocation negatively. Large caps were already lagging so that’s likely to continue this month.

Asset Allocation

Healthcare stocks push us large cap asset allocation down

As expected, U.S. large caps are below target. The drop in UNH has pushed them further below than they were last month despite additional contributions.

Asset allocation compared to last month

Last month’s goal was to push large caps and small caps upwards. I succeeded in the small caps but went in the opposite direction on large caps.

All of that was driven by decreases in UNH’s value and all of that can easily be fixed by additional contributions.

The plan for next month is as follows;

  • Purchase U.S. large caps
  • Cash is at 7.7%, look for individual values or purchase large cap ETFs

Contributions will flow into my S&P 500 fund. I’ll also likely purchase some dividend growth ETFs which are largely focused on large cap stocks such as VYM or DGRO.

Overall, any month where the portfolio goes up is a good one. It’s never great to see an individual stock go down but it happens! I do think healthcare stocks might have a challenging environment in the next year or so but we’ll see what comes of it. After all, this could be a short term drop for all I know.

Disclosure : Long UNH, DGRO, VYM, S&P 500

My March 2019 Portfolio update #investing #money #savings #stocks

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